Only a sufficient housing supply will stop prices from soaring
Only a sufficient housing supply will stop prices from soaring
Housing prices that soared in the first half of 2010 are gradually evening out.
 It is very important to have a sufficient supply of housing to ensure that the
housing market remains stable with no sudden price spikes, said Tony
Vepsäläinen, President of OP-Pohjola Group Central Cooperative at OP-Pohjola
Group's Housing Seminar on 8 August in Kuopio.
When Finland's economy was at its gloomiest in autumn 2008, new housing
construction froze. Builders were intimidated by the recession, whereas buyer's
confidence in their personal finances returned quickly. At the same time, the
record-low interest rates compensated for the economic jitters. Demand for
housing has been high despite the recession.
According to OP-Pohjola Group's housing barometer in March-April, 52 per cent of
people considering to buy a home said that there were no or very few available
that they found ideal. 63 per cent that the local prices were reasonable or
cheap, so people were willing and able to buy, but there simple were not enough
homes available.
As demand has exceeded supply, home prices have been rising since spring 2009.
During the second quarter of 2010, housing prices rose in the whole of Finland
by 10 per cent and in the capital region by 14 per cent year on year.
"The experiences during this recession ultimately prove that only a sufficient
supply of housing can ensure a healthy market with no price spikes. The rate at
which the prices are going up is now slowing," predicted Mr Vepsäläinen at the
seminar, emphasising that a controlled and stable housing market is in the
interest of all parties.
Mr Vepsäläinen thinks there should be a stronger focus on new housing
construction, which is indeed on the rise, but the number of new homes should be
much higher than in recent times to prevent a rift between supply and demand.
Have home buyers taken too much loan?
Interest rates are still record-low, consumer confidence is high and cheap loans
are available, so there is an ongoing public debate on whether households are
taking too much loan.
Mr Vepsäläinen said that thanks to the low interest rates, housing loans have
actually been repaid at record rate.
"Many decide to pay back their loans in equal monthly instalments, but now that
interest rates are so low, the actual proportion of repaid principal is higher.
Although interest rates have gone up moderately, mortgage interests still remain
well below the long-term average."
Both customers and the banks have realised how low the interest rates are and
are prepared for an increase, and customers have in recent times taken out
smaller loans with shorter repayment periods.
OP-Pohjola Group's Housing Seminar
OP-Pohjola Group's Housing Seminar is an annual event arranged in conjunction
with Housing Fairs, with representatives invited from municipalities, builders
and construction companies along with Group member bank customers to hear the
latest news about housing issues. The Seminar was arranged for the ninth time
this year. OP-Pohjola Group is the biggest mortgage provider in Finland with a
market share of over 35 per cent and over 100 years of experience in providing
finance for owner-occupied housing.
For more information, please contact:
Tony Vepsäläinen, President, OP-Pohjola Group Central Cooperative, tel.+358
(0)10 252 4020
Mikko Hyttinen, Senior Vice President, OP-Pohjola Group Central Cooperative,
tel.+358 (0)50 555 3211
Email: firstname.lastname@op.fi
OP-Pohjola Group is Finland's largest financial services group providing a
unique range of banking, investment and insurance services. The Group has the
mission of promoting the sustainable prosperity, well-being and security of its
owner-members, customers and operating regions through its local presence. Its
objective is to offer the best and most versatile package of loyal customer
benefits on the market. OP-Pohjola Group consists of over 200 member cooperative
banks and the Group's central institution, OP-Pohjola Group Central Cooperative,
with its subsidiaries and closely-related companies, the largest of which is the
listed company Pohjola Bank plc.
[HUG#1436785]
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
All reproduction for further distribution is prohibited.
Source: Pohjola Pankki Oyj via Thomson Reuters ONE